The extremely big picture: an awakening giant in focus

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Trying to understand the size of the Chinese market is like
trying to visualise the end of space. Large numbers are hard to
comprehend for even the most brilliant brains.

In the case of China, whichever way you slice and dice it, the
figures that emerge are astounding. For example, by taking the
middle figure between official and unofficial estimates of China's
population (about 1.4 billion people), it would take 15,500 MCGs,
each holding 90,000 people, to house them all.

Another indication of the numbers involved is the discrepancy
between official and unofficial Chinese population figures, which
are about 1.3 billion and 1.5 billion respectively. This leads to a
miscount of some 200 million people.

It's no surprise then that so many of the world's largest
companies are stepping over each other for a slice of the Chinese
consumer pie.

Close to 450 of the world's Fortune 500 companies have invested
in China, with many having established regional headquarters there.
Shanghai attracted $15 billion in foreign direct investment last
year.

A report released late last month at the United Nations
Conference on Trade and Development revealed that by the end of
August, foreign investors from more than 190 countries had set up
more than 530,000 foreign-funded companies in China, collectively
accounting for more than $US600 billion ($A797 billion) in foreign
investment funds.

Meanwhile, anyone who has visited China over the past few years
is likely to have been bowled over by the economic advances in its
major cities.

Apart from the armies of construction cranes that dot the
skylines, the number of luxury cars in the likes of Guangzhou,
Beijing, Shenzhen and Shanghai appears to surpass that of many
Western cities.

Audi, which produces vehicles in China, is the dominant player
in the luxury sedan market, selling 63,000 cars last year. This
accounted for almost 75 per cent of its sales in the Asia-Pacific
region. The fact that 2.3 million new cars are sold in China each
year presents huge opportunities for car manufacturers yet to tap
into the market.

Cars aside, it seems more individuals in China are reaping the
benefits of its unprecedented economic charge. According to Merrill
Lynch, there are now 236,000 Chinese with more than $US1 million to
invest (excluding property).

At the grassroots of China's growth are millions of consumers
with more disposable income. For many city dwellers at least,
luxuries such as home computers and flat screen televisions are now
affordable.

This is unlikely to change. Preliminary findings from a study of
Chinese University students by dragondata reveals the consumption
attitudes of the next generation of professionals differ markedly
from those of their parents and grandparents. The younger
generation has a much greater appetite for debt and this is going
to transform the China market.

Internationally, China's growth is creating a virtual economic
cycle for other nations too, due to the fact it sources much of its
raw materials from overseas. China is now the largest importer of
copper, cotton, wool, rubber and nickel.

It should be remembered that there are limits on Beijing's
ability to control one-fifth of the world's population. Elements of
power have transferred away from the capital, with provinces
striking deals between each other and bypassing Beijing.

In effect, China's primary aim is towards economic growth. As
the nation moves forward, it will be interesting to see how Beijing
reinvents itself to take into account the newfound wealth.